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World’s 6th Biggest Economy Hit By EM Investor Exodus

  • India raises taxes on imports of gold and exports of fuel
  • Rising prices and worsening external finances pose challenges
Jewelry on display in a window of a store in Zaveri Bazaar, Mumbai.

Jewelry on display in a window of a store in Zaveri Bazaar, Mumbai.

Photographer: Kanishka Sonthalia/Bloomberg
Corrected

Investors reeling from the brutal emerging markets selloff over the past six months again fled the rupee as India’s currency hit new lows, prompting the government to curb gold imports and oil exports to arrest a widening deficit. 

The government raised import taxes on gold, while increasing levies on exports of gasoline and diesel in an attempt to control a fast-widening current account gap. The moves sent Reliance Industries Ltd. and other energy exporters tumbling, bringing down the benchmark index by as much as 1.7%. The rupee fell again.